GameStop CEO: chain is the industry’s friend, not competitor

GameStop wants the game industry to see it as a powerful ally, but the chain's …

GameStop isn't a well-loved retailer in the world of gaming. The stores cater to those who buy and trade in used games, and those looking for new releases will often be treated to a lecture about preorders and a sales pitch for a magazine subscription before the title is actually handed over; at badly-managed locations, spending money on a new game can be frustratingly difficult. At the 2009 DICE Summit, GameStop CEO J. Paul Raines tried to explain that developers shouldn't be scared of used games, or his stores.

"I'm here to engage you in a conversation," he told the audience at DICE. What value does GameStop bring to the process? Older games in a series are a way to get customers interested in the new releases. Gamers can trade in their older games towards new releases. GameStop pushes new release games with contests and promotions, not to mention tournament and other in-store events. Collector's Editions also are seeing healthy growth, allowing newer games to be sold at higher prices... with limited extra cost. GamaSutra has all of the executive's arguments about why GameStop is the best thing since sliced bread.

It's going to be a hard sell. While GameStop certainly does move a ton of games, the chain's profit center is always going to be used games; the entire business strategy is focused on getting people to trade in their old games to pick up more used games; it's simply a case of much higher margins. If there is a $60 copy of a new game in stock, along with a $55 used copy, the retailer is going to do everything it can to get the customer to buy the used game.

It's the difference of a few dollars vs. $20 or $30 profit on the title, depending on how much was given in trade-in credit. Selling new games is a rough, thin-margin business—buying games from the manufacturer and then shipping them to stores to be sold for a small markup is a tough way to make a dollar. Giving a customer $25 for a game they just beat, only to mark the price up to $55 and sell it that same day? It's a much easier task. While there are ways to sell your games for more money, the convenience of GameStop is hard to beat; you can find the chain in nearly every shopping center and mall in the United States.

GameStop claims deals like this help drive sales of new games

The industry is fighting back with more and more content being given away as one-time use downloads in new copies of the game, meaning you can lose out on maps or other content if you buy used. Selling copies via digital distribution is also a popular way to escape the buying and trading loop of GameStop: when someone purchases Burnout Paradise on the PlayStation Network, there is no way to sell that game to a store or even a friend... it's locked down.

Digital distribution may prove to have an uphill climb ahead of it, even without the challenges of storage space and variable download speeds: according to the NPD Group 75 percent of consumers prefer to buy games at retail stores, and 58 percent have never downloaded a game.

There may not need to be any kind of PR battle. GameStop is way too powerful for any publisher to snub, but it's always going to be an uneasy business relationship. Used games aren't going away any time soon, nor should they—the ability to sell your content after a purchase is an important one to consumers. Holding the hand of friendship out to the industry while paying armies of teenagers to cut it out of the revenue stream is only going to get GameStop so far in the hearts and minds of developers and publishers, no matter how many speeches are given.